Why Cryptocurencies are Unpredictable

You might have not in a position to ask yourself the above question but it is good that someone has taken the initiative of asking it. Now Why-Cryptocurencieslet’s start with what cryptocurrency is. It is a form of currency that is basically circulated through block chains and are not transacted through financial institutions like banks and other institutions. What is cryptocurrency are transacted through intermediaries called miners. The miners are basically those individuals who ensure that a transaction goes through and that the users of a certain penny cryptocurrency platform get to buy and sell their cryptocurrencies. Without the intermediaries (miners), it is impossible for cryptocurrencies to be transacted.

Why are cryptocurrencies so unpredictable then? They are unpredictable basically because of three main reasons. The first reason is that their value normally keeps fluctuating with the change in value of the main currency. For example, if you have bought a certain amount of bitcoins when the value of US Dollar is favorable, then, you stand a chance of losing if the value of currency deteriorates. The first reason why cryptocurrencies are unpredictable is basically because of the fact that they largely depend on the value of other mother currencies such as the dollar, Yen and other currencies.

Secondly, they are unpredictable basically because of scarcity that is accrued from the issue of hoarding. There are some instances when people buy cryptocurrencies with the aim of keeping them until when their values improves. Now with that issue of hoarding, the scarcity of cryptocurrency will set in. Latest cryptocurrency news when the cryptocurrencies in circulation are scare, the value will tend to increase basically because of the fact that there will be a high demand for it. People will keep cyptocurrencies even without your knowledge and you may never tell when they will release them into circulation.

Thirdly, the cryptocurrencies are unpredictable because sometimes, it image is tarnished by the government policies. Some of the government policies have banned the use and transaction of cryptocurrencies in the country or state. The reason behind the banning is due to the idea that it is a business that evades tax contribution. Some of the countries have also banned them because cryptocurrency mining consumes a lot of power. When the government suddenly bans anything related to cryptocurrencies, then it means that the value will be affected as well. A person may sell whatever he/she has just to avoid being penalized.

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